brainstorming wednesday

1. The dark side of this moon is that we rallied into it as of today which should mark the top of wave A very likely. Amazing as the lack of any news which could be called constructive by any means just empty promises as we had them before Lehman came to full frutition. People do not learn it seems as the situation in Greece deteriorates by the hour plus all the other ugly stuff going in in the world up to a casus belli with Iran as Marica accuses them of plotting murder. The Slovakai decision was not benign and the bank recapitalisation of the EU banks is not good news either. Finally the white night China who claims to save the bankrupt EU is in deep trouble  itself- the following is just one aspect.

excerpt

 

Credit Suisse Buries China’s Banks

Submitted by Tyler Durden on 10/12/2011 – 10:55Bad Bank Bank of America Bank of America Book Value ChinaCountrywide Credit Suisse Cumulative Losses ETC GoldilocksReal estate Slovakia

Wonder why China just bailed out its banks, preemptively, on Monday? Here’s why. In a report issued by Credit Suisse’s Sanjay Jain, the China strategist, who joins such now infamous skeptics as Bank of Countrywide Lynch’s David Cui, has revised his base case Non Performing Loan ratio forecast from 4.5%-5.0% to 8.0%-12.0%: a unprecedented doubling in cumulative losses. Why unprecedented? Because as he explains, this could “would work out to 65–100% of banks’ equity.” Crickets? Yes, Credit Suisse just singlehandedly said the equity value of the entire Chinese banking system is between 66% and 100% overvalued (with a downside case of $0.00). So for those putting two and two together, on one hand we have the four horsemen of the Chinese apocalypse, already presented visually before by Bank of America, consisting of i) a surge in underground lending, ii) a property downturn, iii) bad bank debt and iv) and “hot money” outflows, and on the other we have the vicious loop of what this means in terms of a central planning reaction. Simply said look for China to scramble to undo all the signals that it had been trying to spark while it was fighting with the Fed-inspired inflation bubble. Only problem is that like in the US and Europe, finding the Goldilocks point where all 4 are in equilibrium will be next to impossible, especially if investors in the country’s banks realize the equity they hold is worthless and scramble to get the hell out of Dalian. Then the fears over a parliamentary vote in Slovakia will seem like a pleasant walk in the park.

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~ by behindthematrix on October 12, 2011.

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